UK construction output falls for third month in September: ONS

Construction output fell 0.2 percent in September, after a hefty 3.4 percent decline in August and against expectations for a 1.5 percent rise, the Office for National Statistics said on FridayReuters | November 13, 2015, 18:30 IST

LONDON: British construction output fell unexpectedly for a third consecutive month in September, in figures that confirm the sector's drag on growth in the third quarter, official data showed on Friday.

Construction output fell 0.2 percent in September, after a hefty 3.4 percent decline in August and against expectations for a 1.5 percent rise, the Office for National Statistics said on Friday.

On the year, it dropped 1.6 percent in September, the biggest drop over two years and against forecasts for a smaller 0.3 percent decline in a Reuters poll.

The figures confirmed an earlier ONS estimate that construction fell 2.2 percent in the third quarter, making it the biggest drag on overall economic growth over that period.

A preliminary reading last month showed British gross domestic product slowing to 0.5 percent from 0.7 percent in the second quarter.

The ONS said the weakness in the third quarter construction output was partly down to a marked fall in construction by smaller firms in August due to bad weather and longer holidays taken.

For the quarter as a whole, new housing construction fell by 4.3 percent, its biggest decline in just over three years, reflecting a drop in housing starts in the previous quarter around the time of May's national election.

Late on Thursday, the Bank of England's chief economist Andy Haldane described Britain's housing market as "broken", blaming the long-term lack of construction of new homes particularly by the public sector.

Construction, which makes up around 6 percent of Britain's economy, fell sharply after the financial crisis but gained pace in 2013 and 2014 before easing into early 2015.

Recent surveys by mortgage lenders showed house prices, which often act as a leading indicator for residential construction, accelerated in October boding well for activity in the final quarter of 2015.

British house prices rose at a much faster monthly pace than expected last month, according to Halifax, while another survey by Nationwide also showed house price growth accelerating.